What The Founder's Dilemmas Is About

The full narration of the video.

Three years after a startup opens its doors, half of its founders are no longer running it. By the day it goes public, fewer than a quarter are still at the helm. Where did they go? A Harvard Business School professor spent about ten years studying nearly ten thousand founders, and wrote a book: The Founder's Dilemmas. He found that much of the trouble doesn't start later. It starts with a few early choices that feel completely natural. Let's follow two friends from opening day.

First fork in the road: who do you build it with? The easy pick is friends and family. You know each other, you click right away. But the book says this road hides the deepest holes. Friends can't say the hard things out loud. If it falls apart, you lose the business and the friendship. Second fork: how do you split the company? In the book's data, more than seven in ten teams settle the split in the first month. A third simply go fifty-fifty.

Fifty-fifty sounds fairest. But on that day, nobody knows who will work harder, or who will walk away halfway. What's fair today can be the least fair thing three years on. One fix from the book: don't lock it all in at once. Agree that each share is earned bit by bit over time. If someone leaves early, the unearned part stays with the company. The third fork holds the answer to that opening number: do you want to be rich, or do you want to be king?

To grow big, you bring in investors and more experienced managers. As the money comes in, the top job and the final say slowly slip away. Most founders who stepped down were asked to leave by their investors. Later the author looked at over six thousand American startups: for each thing a founder kept a grip on, the top job, or the board, the company was worth about a fifth less on average. So there's no single right answer. Let go, and your shares are worth more. Hold on, and the company stays smaller, but it's yours to run. The book asks just one thing: before you open, decide which one you want.

To be fair: most of this data comes from American tech startups. Not all of it fits a small restaurant. Teaming up with friends, splitting it fifty-fifty, staying the boss: the three choices that seemed easiest are the ones to think through first. What did you used to think was the fair way to split a partnership?